Town Square

Fact-Based Decision-Making at Alma Plaza

Original post made
by Karen White, Duveneck/St. Francis,
on Mar 23, 2007

Good decisions by policy-makers are based on good information. What information is important to know at Alma Plaza? Facts that should be considered in decision-making include these:

1. Cost of land. This has been a source of question for some time now. The developer has claimed that any additional retail would bring a financial loss. In reality, the purchase price of the land was far below market rate. The Santa Clara County Assessors' Office website shows that on October 12, 2005, parcels at 3401, 3417 and 3445 Alma were transferred as follows:

In short: the developer paid $6 Million for the entire Alma Plaza site, a price-per-acre that has not been seen in Palo Alto for a very, very long time.

2. The nature of Greenbriar Homes' projects.

According to the company website, current and past Greenbriar developments are 100% residential. This sheds light on the developer's wish to subdivide Alma Plaza, eliminate most of the retail services provided now, and replace retail with housing  even at ground floor.

3. The cost to build housing.

Professionals in real estate development report that the actual cost to build housing (excluding land and site improvements) averages somewhere in the range of $190  220 per square foot. Greenbriar has a development in Dublin, "Riva," of homes similar in size to what are proposed for Alma Plaza. At Riva, Greenbriar bought the land, made site improvements, constructed the homes, and now is selling them profitably for $669,000 to $769,000  far, far below the range of $1.5 Million these same homes would sell for in Palo Alto, with a similar cost basis as in Dublin.

4. The sales price for homes in Palo Alto.

According to Alain Pinel Realtors and others in real estate, the average selling price for homes in the area of Alma Plaza in 2006 ranged from $740 per square foot in South Palo Alto to $835 per square foot in Midtown. Applying the more conservative multiplier to 39 housing units proposed for Alma Plaza, at an average of 2,000 square foot each, totals $57,720,000 total from the sale of residences.

5. The "benefit" of public benefit

The value of the in-lieu public benefit for affordable housing should be based on the actual anticipated selling price of homes at market rate, not the lower "asking price" that has been suggested by the developer.

Separately: Apparently the Pacific Art League intends to sell their downtown building. The second and third floors, now used as studio and gallery space, would be converted to condos; the Art League would buy the first floor back for their own use. Would space for the Pacific Art League at Alma Plaza represent net additional space for this non-profit, as a public benefit? And why is this space being identified for three separate uses: non-profit, as private meeting space for residents, and as retail space? Each use is different, and only retail space is "retail."

6. Finally: what "process"?

We have seen in the recent past situations where a developer proposes a massive over-build and blames community members for delay and "process" when they merely ask that the Comprehensive Plan and reasonable zoning be applied. Jim Baer wrote an eloquent Guest Opinion published in the May 26, 2004 edition of the Palo Alto Weekly. His words are as relevant to Alma Plaza as they were in the context that they were written.

"The unpredictable bumps of the Process will not defeat a project if -- and this is critical -- the project has a sense of gravity (momentum) and downhill direction, meaning whether a project is "approvable," as consistent with community policies.
Here is where Hyatt created its own fully predictable failure. Experienced persons in the community predicted that more than 300 housing units would never be approved.

This was made clear to Hyatt as early as 1997, when Solit interviewed more than a dozen Palo Alto insiders (names familiar to Palo Alto readers). City staff, Chamber of Commerce leaders, council members, developers and residential activists advised Hyatt that its project was effectively dead on arrival.

The hotel was not the problem. A project with 200 housing units would have been approved within two years. Hyatt's proposed 300 housing units plus hotel could have received a denial within the same time. Hyatt prolonged the Process rather than (1) accept certain denial for its 300+-unit project or (2) cut back to 200 units.

We cannot know whether Hyatt's refusal emanated from Hyatt's Chicago headquarters, overconfidence from past successes, or local arrogance. In any case, Hyatt created its own Process -- for failure."

Palo Altans will be proud of a development at Alma Plaza that incorporates true mixed-use, retaining ground-floor retail to serve the center's neighborhood and beyond.

Posted by Not so fast
a resident of Duveneck/St. Francis
on Mar 23, 2007 at 3:44 pm

Karen--you previously posted a sizable portion of the above comment on another Alma Plaza thread and you receive, IMHO, an excellent reply from Jeremy Loski.
My two questions are:
1) When will this fact-based decision making occur? In our lifetime?
2) Will the neighbors (or a small vocal portion of them) ever be satisfied with a proposal for Alma Plaza?

The information I know regarding Alma Plaza is:
1)This has been dragging on for 10+ years
2)First there was too much retail proposed and now not enough retail
3)There was a perfect plan in place a few years back but that was shot down by a "neighborhood leader" who managed to get our spineless city council to include Alma Plaza in a Charleston corridor building moratorium, which BTW, was pushed through late at night and was not even on the council's docket for that meeting
4) The developer must be able to make a profit from this
5) I am not sure any retail shops will want to open in Alma Plaza given it's location--the neighbors may want groceries, dry cleaners and video stores, but they may have to invest their own money and run them themselves.

One question I have relates to your #4 above. I am still confused about the process. My understanding (which could be wrong) is that AP is zoned commercial, and was when the developer bought it. He now wants a variance to make it an economically viable project. But if he doesn't get the variance, doesn't it just mean he overpaid for the land, and will either (a) sell to someone else at a lower price who will build what is allowed under the zoning or (b) build an allowable project himself and have to write-down the value of the land?

It's the old "sunk cost" problem - if he over-invested, he made a mistake, and that money is gone. He needs to believe he'll make a profit on his incremental investment if we want him to go ahead.

Another question, while I'm at it - say the neighbors are self-interested NIBMY's. It may turn out that most of us are, with respect to some project or other. Isn't the bigger fault with the City Council? After all, who actually gets to decide - the vocal neighbors or the Council (or someone else)?

If it is the Council, then the problem is theirs - even more so since if in fact they allow interest groups to stop them from making good decisions (or any decisions), they encourage more interest groups to come forward later, rightfully asking for the same consideration.

So if the Council is the decision-maker, and decisions get delayed or wrong ones made, we shouldn't blame the neighbors for speaking up - we should direct our frustration at the Council who didn't do their job.

Posted by Not so fast
a resident of Duveneck/St. Francis
on Mar 23, 2007 at 9:10 pm

I clearly place the blame for the whole Alma Plaza fiasco atthe feet of the spineless City Council--they have refused to make a decision on this issue. However, people in PA know how to get the city council to play into their hands--the neighbors know what needs to be said and done so that the city council will not make a final decision.
But I guess when you are busy shopping for plug-in hybrid cars, the cities finances come second.

Posted by A drive-by observer
a resident of another community
on Mar 24, 2007 at 1:05 am

Alma Plaza is an unsightly, boarded up mess. How Palo Altans continue to live near such a shabby, derelect rundown area year after year is beyond me. Anything is better than what's there now, but that's why I live in a City south of Palo Alto - we take pride in our town.

The size of AP is too small for a Costco, Best Buy or decent supermarket and the neighbors and city council have tangled for years over the retail/housing mix. We already have enough new housing in south Palo Alto and desperately need a neighborhood shopping area with a cleaners, coffee shop, Kinko's type store, mailing store, etc. Why is that so difficult? That is why we all travel to Mountain View to find those very places.

Posted by Jeremy Loski
a resident of Ventura
on Mar 24, 2007 at 3:07 pm

Kudos to Ms. White for her for doing her homework…some comments…

What bears repeating is that the entire kit and kaboodle known as Alma Plaza is representative of process run amok. Thank goodness that our current crop of policy makers are up to changing the conditions that have in the past permitted that "amokness".

About process run amok:

Why shouldn't residents use various tactics to get their way, especially if their past similar actions have been reinforced by past policy-making groups? Residents have, in short, learned a bad habit.

Why shouldn't past potential policy makers cater to certain "key neighborhood influencers", as it's those influencers that have helped them get elected? This is a universal political reality that will never entirely disappear; the only times we see alterations to this reality is when current political paradigms begin to fall apart, as is the case in Palo Alto (and many other municipalities in California).

Why shouldn't developers use the various tactics that they use (including the developer that Ms. White quotes) to game the system. After all, developers talk to each other; they know what wheels to grease; they can compute perceived time delays as a component of the cost of doing business, and so on.

Going back to Mr. Baer's article, and Ms. White's use of it, Mr. Baer's "formula" is mostly common sense - i.e. use the power of hard work, deep knowledge of process (learned from taking hard knocks followed up by persistent new learning, and persistence in action), political gaming (an understood reality  not a bad thing…city officials, staff, and key residents), and so on. Mr. Baer has build some nice projects, has worked hard in accomplishing his goals, and we should all be happy for him.

But again, what part of "understood terms" has the McNellis group been introduced to that would have resulted in having something already built at AP? Another way to ask that question is "what kind of city development demeanor would deliver an easily decipherable and firm message to both developers and residents about how our city is going to grow  and if that demeanor had been in place when McNellis bought the AP property, would we be where we are today?"

A measured answer to the above question is that "Palo Alto doesn't have such a demeanor, yet". Thus, the AP problem.

Thus, my preference for the current McNellis plan. Just build the darn thing - now!

How much money has delay cost our city in terms of property tax and/or retail sales receipts? Answer: a LOT! Will this project ever be "perfect"? No. Might it end up better from the resiodent's POV? Maybe. Might the developer be making too much money? What's "too much money"? And on and on it goes, with arguments on both sides  concessions back and forth, gaming the system from both sides, more talk, new Council members with different ideas (elected with support of more "key" residents, and so on).
All this is a normal part of process, unless it is permitted to become the kind of municipal cancer that we have let it become  i.e process that - like a caner cell  grows out of control, and stymies development, people (on all sides), and progress.

Another thing: most "key" residents weighing on retail development have a dangerously ignorant idea about what it takes to make a go of it in Palo Alto as a retailer, or what deleterious effects the development of some retail has on other, existing retail.

For those who want to take a 100 yard stroll to a market at AP: Has ANYONE considered what effect a supermarket at AP will have on JJ&F, or Piazza's. Has anyone asked those vendors? if you haven't go ask them. How about the done deal for Trader Joe's at T&C? This is going to *hurt* JJ&F, big time.

Do those who are angling for "convenience stores" at Alma have any idea what a small, non-chain, retailer faces when per sq.foot prices rise above $2.50?

My argument is not pro-developer, or pro-resident. Rather, my argument is for more accurate, comprehensive information that is not biased, or used in a biased way  all that, and a deeper reality check on the realities of what certain kinds of costs commercial markets (retail, property development, etc) can bear.

My quarrel with Ms. White's use of Mr. Baer's formula for success is to imply that Mr. Bear "gets it", and Mr. McNellis doesn't. It's Ms. White's way of saying "I think McNellis is wrong". I think that's a bit disingenuous, because if what Ms. White represents Mr. Baer's "formula" as "the secret sauce" for getting things done here, what developers other than those who are very inbred with our system have a chance to accomplish anything here in any sort of efficient way? In fact, that's the case.

Might other local developers who are better in the know than Mr. McNellis about "the way things work" here let it be privately known that if this project is held up to a point where McNellis has to sell it, that they will take it on?

Another thing that bothers me about Ms. White's post is that she appears to have a problem with the fact that Mr. McNellis is selling homes in another community (a much lower priced and less-well-known community) for less than he would sell them here. My question to Ms. White, and others is "why shouldn't Mr. McNellis do that?

Why doesn't Ms. White point out that the developer she quotes chooses to develop property in Palo Alto, thus generating more profit to that developer than similar developments in other communities? What's the difference?

Without mentioning names, I have spoken to local developers who have built retail, and who *know* from experience that the businesses they sign in for leases are going to fail. But then, that's the retailer's problem, isn't it? Because the retail space will be there, ready to rent to the next small-time entrepreneur, with that entrepreneur taking all the risk. This is not to paint the developer as insensitive. It's rather to point out that there are certain realities at play that most residents don't consider when they cry out for certain kinds of "comfort" retail.

How about the hue and cry for certain kinds of retail here that when once built, doesn't get supported in a way to maintain profit? That happens a LOT in Palo Alto (retail churn is a reality here), and will continue to happen until most of our retail space gets built out to serve very high end retail, and chains. Long-term, a lot of small-time boutique retail is going to exist mostly as a hobby-horse enterprise, by those who can afford interminable losses, or barely marginal gains. There are several of these kinds of businesses popping up in Palo Alto already; they don't make money, and exist only because a well-heeled owner wants to maintain them.

What will ultimately be built at AP? Who knows? What we know for sure is that the interminable process that has made this project go on for years needs to be redone, and that something needs to be built at AP, ASAP.

Posted by alma plaza neighbor
a resident of Fairmeadow
on Mar 25, 2007 at 8:50 am

We live within a very short walking distance to Alma Plaza.

Currently, we shop at the Mountain View Safeway for our groceries, unless we are running late, then we shop at Piazza's (which is otherwise either too expensive, or too small for our general shopping). Although I wouldn't characterize us as particularly fussy shoppers, we don't care for the Palo Alto Safeway on Middlefield.

From my perspective:

Although unnecessary, since we can always go to Safeway MV, it would be a great plus if retail went up at Alma Plaza that generally met our daily shopping needs: selection, price, etc.

Additionally, it would be nice if a bar didn't go up that either pulled in a rowdy crowd, was especially noisy, or discharged a bunch of walking drunks, or drunk drivers into the neighborhood each night.

When my son gets a little older, Alma Plaza be a natural place for him to hang out: it would be nice if there were more kid-friendly stores there than, say, an adult bookstore or an all night liquor store.

If a substantial housing development goes in there, which I assume would be packed to the rafters with skateboard and bicycle riding kids for our many nearby public schools, I would hope that the city would consider narrowing, closing, or otherwise slowing down East Meadow at the Alma intersection and below.

Posted by Paul Losch
a resident of Community Center
on Mar 25, 2007 at 10:05 am

I usually am not one to make specific suggestions around things that are much larger issues than my specific comment can cover. But, I will make an exception here, as it relates to PALO Alto retail, Alma and Edgewood Plazas.

Smart and Final is very different from traditional grocers and Big Box. I drove by one recently when I was in the East Bay, and went in to have a look, since I was not familiar with them.

At a hgh level, here is what I think such a store could provide:

--bulk items at lower prices, such as what we all get at Costco
--a decent selection of the last minute items like milk or bread that often lead to unplanned trips
--a selection of other items that are not typically offered at the TJ's and Whole Foods of the world, and priced for people looking to spend less on their shopping trips
--a store with a footprint that fits into places like Alma and Edgewood. I have visited two as part of my "research" and neither store was more than 20,000 SF.

Granted, it does not have the same personality that JJF, Mollie Stones or Piazza's offer, but maybe that is the point, too.

We really do need to take another approach to these matters going forward. What has contributed to this particular impasse, and a plethora of others in recent years is at this point simply unacceptable. I get accused from time to time of "thinking too much." Palo Alto suffers mightily from this ailment.

Posted by Jeremy Loski
a resident of Ventura
on Mar 25, 2007 at 11:55 am

Paul, Smart and Final would be a good choice, mostly because an independent grocer woudl succumb at AP, eventually. the economics for independents are not looking good. That said, any grocer put in place at Ap will definitely impact Piazza's. That's a market reality, and Piazza's will have to dela with it. The latter will probably do OK after taking a small hit, because they're (Piazza's) creative and know the PA sweet spot. Future development in the southern part of town will keep Piazza's thriving.

Posted by GGR
a resident of Charleston Gardens
on Mar 25, 2007 at 6:05 pm

No housing on the first floor level of this site should be allowed! This is an essential retail site for South Palo Alto. There were only about three dozen neighbors of Albertsons plans that objected to their plans. There are thousands of people in South Palo Alto that woulb be served by retail and a competative grocery store at this site. The mayor called for a walkable city. Who can walk to Mountain View to shop for groceries, etc? Let some housing be built on the second and third floor and require underground parking for the housing. Lets not be a city run by developers of big projects with an attitude that they can do anything they want.

Posted by Resident
a resident of Another Palo Alto neighborhood
on Mar 25, 2007 at 9:03 pm

Just drove by Alma Plaza, there seems to be a lot of police activity going on. I have no idea if this was an incident, a practice, or just a regular occurrance, but because this is now a derelict parking lot, I am not surprised if it is a hangout for criminal activity. Lets get something done to prevent this as soon as possible.

What worries me about putting retail in Alma Plaza is the fact that Palo Alto schools are already bursting and an increase in population in our schools is already expected. The district is going to add classrooms at Fairmeadow, despite the fact that Fairmeadow doesn't even have enough outside space to conduct P.E. properly for the kids. There's not enough room to run around and often not enough benches upon which to eat lunch. More housing means more kids, more crowding in the schools, and a decrease in the quality of education.

I agree that Alma Plaza looks horrible the way it is, but I see no reason that retail necessarily has to look ratty. The Piazza's shopping center looks nice, and it's essentially the same kind of place that residents in the neighborhood want for A. Plaza.

Posted by Karen White
a resident of Duveneck/St. Francis
on Mar 28, 2007 at 9:56 am

Alma Plaza can be improved in a way that benefits our community with revitalized retail and is profitable for the developer at the same time. Notably, Alma Plaza is designated a Neighborhood Commercial center in the Comprehensive Plan.

The current plan to subdivide the site and build housing on 75% of it fails this test. But surely a compromise can be achieved that meets the intent of the Comprehensive Plan, our Municipal Code, and our community's best interests in preserving retail at Alma Plaza.

"Yet a key issue is being virtually ignored: the inherent vagueness of the planned community (PC) zone. Alma Plaza is one of a few parcels in the city zoned PC, meaning the city has not established any specific zoning policy or restrictions. It allows a property owner to propose any development plan, and persuade the community of its benefits. The approved project constitutes the zone's conditions.

The city's Comprehensive Plan, which guides but does not restrict development, designates Alma Plaza as neighborhood commercial. With PC zoning, developers naturally propose what will be most profitable, and they sweeten their proposals with "public benefits," which city officials often expand -- a form of legal civic bribery (if the benefit is offered) or civic extortion (if it is required). "

Posted by stephen levy
a resident of University South
on Mar 28, 2007 at 8:33 pm

Is there a clearer example of the confusion (hypocrisy?) of some residents re Palo Alto and housing. We have been given a faur share allocation of county housing need and the City and some residents complain that the allocation is unfair because we don't have enough "room" for housing. Just to be clear, this issue has gone to court in some cases and "not enough" is not legally defensible.

But here as in other places (e.g., Edgewood Plaza) there are active proposals for housing and always they are opposed or cut back. It seems like when residents are given feasible housing proposals they are opposed in some form.

Instead residents ask for more retail, which has greater traffic impact, all the while complaining about traffic. At Alma as at Edgewood what residents desire for retial rarely meets any market test. It is a wish list and duplicated elsewhere nearby. I am not aware that the region or city is short of coffee shops or places to get food. I am trying to be open-minded about this but it sure feels like shopping convenience triumphing over our oblogation (legal and moral) to participate in addressing regional issues.

It is hard for me to see how the City Council and local neighbors are dealing in good faith with what regional and business leaders say is the most critical regional economic challenge--not enough housing.

Posted by stephen levy
a resident of University South
on Mar 29, 2007 at 8:04 pm

Well, we will have a chance to see how residents react to an Alma Plaza plan that includes a grocery store and coffee shop and housing. Will residents still complain about the housing and want it reduced?

In response to the comments here and in the other thread.

One, yes a fair share housing allocation for cities is suggested by ABAG (the regional plannning agency) as required by state law for housing in low, moderate-income and maket rate units. A city can appeal and if they win a reduced number of units, they are reallocated to other cities in the county. The criteria for determining a city's fair share are projected job and housing growth and exisiting jobs and access to tranist--where Palo Alto rates high.

Many relatively built out and affluent cities complain here and in every region of the state. Generally they all make the same claims as are made by Palo Alto residents as they, like Palo Alto residents, act to reduce the scope of every housing proposal received.

Part of Palo Alto is a "stand up" city. We are not afraid to stand up for national and worldwide policies that we think are right whether that be civil rights, global warming or wars that residents oppose.

I just wish that some of that "caring about the broader common good" was reflected in votes on housing here.

As far as retail and traffic there are three considerations. First, residents are conflicted as to whether they really want big units like Costco for convenience and tax revenue or smaller retail units. But the Edgewood and Alma examples show that smaller retail is often out-competed by bigger stores and the smaller stores close. Second, once people get on their bikes or walk there are better store options close by, which are likely to prevail anyway in the marketplace.

Finally, I do not drive and lived near Edgewood Plaza for 20 years. I sure didn't see many people walking or biking and carrying groceries back that way. I think it is a fond wish but not reality.

I remain convinced that this is mainly about people wishing the congestion of daily urban life could pass them by and go bother other people and a council caught between the very human emotions of getting beat on by their friends while all the while they advocate regional and worldwide responsiblibty in other areas.

Posted by Not so fast
a resident of Duveneck/St. Francis
on Mar 30, 2007 at 8:45 am

According to the article in today's PA Weekly:Web Link
it looks like the information that Ms White posted above is wrong and misleading.

As stated in the article:
"Nonetheless, under the particular zoning type proposed for the 4.2 acres on Alma Street near East Meadow Drive, the commission doesn't have the ability to impose specific requirements.

The "planned community" (PC) zone is a blank-slate designation that requires both the property owner and the city to agree on its terms, city staff told the commission.

Several commissioners realized their hands were tied when Planning Director Steve Emslie confirmed McNellis' intention to proceed to the council if the Planning Commission did not accept the zoning as proposed."

Perhaps Ms White would like to enlighten us as to where she gets her information from and/or why she is posting misleading information regarding Alma Plaza.

Posted by Forum Reader
a resident of Stanford
on Mar 30, 2007 at 3:17 pm

Another Premature Posting by Not so fast (aka Jeremy Mike Anna).
The Commission does NOT impose conditions. It makes recommendations to the council. Big difference. The developer said he would not accept any recommendations for changes. An example of extraordinary arrogance, I hope the council does not cave in to his threats.

Posted by Karen White
a resident of Duveneck/St. Francis
on Apr 1, 2007 at 2:12 pm

Those with questions on land use at Alma Plaza might refer directly to our Comprehensive Plan, which defines the plaza as a Neighborhood Center, and our Municipal Code, which outlines the uses to be found in these centers. Both documents are available on the City's website.

In addition, Planning & Transportation meetings are available on local Government Access channels and on recorded video. There is no need to rely on press summaries of meetings that instead can be viewed first-hand.

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